Tag: technological transformation

The Covid-19 pandemic – which has led to different financial burdens on individual insurance markets – has fundamentally changed the professional world through the widespread use of home office work solutions. Insurance is a particularly labour-intensive sector of the economy, but it has the great advantage that most of the work does not necessarily have to be carried out at the location of the company. Thus, home office work solutions will, at least partially, become the new norm in the insurance business of the future, with all the consequences, such as fewer office space requirements, more powerful IT systems and a stronger focus on social issues on part of management.
 
Even before the outbreak of the pandemic, there were intense discussions as to whether the sales process could be shifted to the Internet, just like in other business sectors, which would mean a drastic reduction in sales staff. Findings thus far show that the insurance customer likes to search for information and offers electronically, but still prefers the advice of a physical person when concluding an insurance contract. This can be explained by the complexity of insurance products as well as by the fact that most people interested in insurance would rather entrust their sensitive data to a person than to a machine. However, we can expect that future generations of “digital natives” will increasingly conclude their insurance contracts online. The insurance sector is therefore also investing in expanding its online options, for the time being primarily in products that require little explanation. The number of such products might increase in the more traditional or core areas of private insurance as well. The widespread shortage of skilled workers could fast-track this transformation.
 
However, insurance advisors do not have to worry that their work and jobs will become obsolete. On the contrary, providing expert advice about products will still remain their main task -, especially in corporate insurance, where the role of the advisor will gradually shift to ​​risk evaluation and risk management. Additionally, they will also continue to provide certain ancillary services.
 
As mentioned above, insurers have significantly increased their willingness to take on new and additional risks in recent decades. In addition to the property insurance risks, new offers in terms of so-called Financial lines, covers such as D&O and Cyber, and even more special solutions are now a standard, not just for large companies. Currently, some rethinking seems to be taking place, partially initiated by the war in Ukraine. Insurers are rediscovering the possibility of saying “no” to certain risks across the board. An example is the exclusion of entire territories from cover, such as Russia, or the withdrawal from certain exposed sectors, such as Cyber. The principle that “everything is insurable as long as there is an adequate premium for the risk” is overridden when other fundamental factors such as the principles required by governance and compliance come into play.
 
Other challenges, such as the current inflation and the continued low investment income, which will probably also lag behind inflation in the near future, will not be discussed here due to a lack of space. These challenges have either subsisted for a long time or they keep coming back. The insurance industry has learned to live with them and is still able to report very good economic results every quarter.
 
In summary, the transformation in the insurance industry can best be described with an image: The market participants are developing from large tanker vessels, which operate with many sailors and use nautical charts made of paper, to fleets of small, largely automated ships, which are heading towards their ports of destination with the help of GPS .